Modernizing a benefits program? You need better analytics

By Andy Smith

Jan 10, 2018

Government agencies face numerous challenges when it comes to social benefits programs. Skyrocketing costs represent the biggest issue, while an aging population and the complex, disjointed nature of benefits systems adds to the problem.

Trying to change these systems, however, can be painful. Look no further than the efforts to repeal and replace Obamacare to see how difficult it is to amend or modernize large government social benefits systems.

Modernization

Just as benefit programs were developed in a fragmented manner, so too were their supporting IT systems. With legacy IT is the norm in government, hardware, software and processes associated with these benefits systems are especially entrenched and outdated. Information siloes inhibit data sharing, and hard-coded rules make policy changes difficult to implement.

Agencies struggling to transition from legacy systems must also change the citizen-facing and back-office environments. Services must go beyond simply providing a transaction and move to a more interactive experience. Data should be shared among relevant systems so that citizens only have to provide information once to access multiple services from a common portal.

While the front office gets most attention, the back office offers the real opportunity for cost reductions. There is no point having a great interface, if it’s joined at the back end to paper and filing cabinets.

Transforming the back office starts with analytics, which is integral to modernization plans. Government agencies collect massive amounts of data that must be put to effective use. For example, data should be used for:

Improving services. Just as travel websites and banks use data to segment the market and create tailored, personalized offers, government agencies can do the same with social benefits.

Protecting the vulnerable. There are too many children whose risky conditions are known to multiple agencies but not shared. Without compromising privacy, analytics can provide a holistic view of a child’s risk, allowing authorities to intervene before tragedy strikes.

Analyzing policy. The internet facilitates rapid feedback, allowing agencies to be proactive and inclusive in gathering and analyzing feedback and adjusting policies and procedures.

Fraud and improper payments

With slashed budgets, it's vital for agencies to prevent fraud and improper payments that drain money from the system. Analytics can help agencies defend programs against fraud and improper payments in several ways.

First, analytics can quickly detect suspicious activity and alert investigators to possible fraud. It can also help agencies diagnose the eligibility and legitimacy of benefit claims by analyzing related data sources.

Chasing after money paid to fraudsters is labor intensive and often results in few recovered funds. With integrated data from multiple sources, analytics can detect potential fraud in near-real time, preventing improper payments before they go out.

Benefit modernization done right

New Zealand’s Ministry of Social Development provides social welfare benefits to more than one million New Zealanders, at the cost of more than $22 billion every year.

Controlling that cost, while improving the lives of children and families was essential. MSD data revealed that a third of its liability was for people who entered the system as children. To make a difference for families and taxpayers, MSD began by applying analytics to the delivery of government services to learn more about who receives benefits and what support and investment they need most.

The first step was creating a data model to estimate the risks of welfare dependency among the most vulnerable group: teen parents and young people unable to live with their families. By matching and analyzing data across several government agencies, MSD was able to predict the probability of this population transitioning to an adult benefit. This meant agencies could offer targeted services that would reduce long-term benefit dependency, such as a personal mentor or budgeting training.

The outcomes have been remarkable. The agency expanded the program, and taxpayer savings are estimated to be $1 billion over the next four years. Families are getting the support they need. Unemployment among single parents has dropped by 10 percent, and thousands of children are avoiding the welfare system.

Modernization opportunities

As government agencies transition to new systems and technologies, they should identify opportunities for fundamental changes. Siloed, inefficient systems built with shinier technology will perpetuate the inefficiencies that plague current programs.

Modernization is a chance to clean dirty data and step up data integration and sharing, laying the foundation for widespread analytics use. Efficiencies will generate positive citizen experiences, lower costs for the taxpayer and enable better targeting of those in need.

About the Author

Andy Smith is SAS public sector industry director for Europe, Middle East and Africa.